Accused of fraud, Coast casino workers forced to repay COVID unemployment. ‘Nobody lied.’
Casino employees across South Mississippi recently received a letter informing them they must repay some of the state unemployment benefits they received at the beginning of the coronavirus pandemic.
All 12 Coast casinos closed in March 2020 and reopened two months later with safety precautions to protect staff and customers
BJ Smith, a pit boss at Treasure Bay Casino in Biloxi, got one of those letters. It arrived the same day as the stated deadline to appeal the decision, he said.
He doesn’t know how many others in South Mississippi were told they must repay benefits. Smith said he saw a stack of about 40 to 50 copies of letters from other employees when he went into Treasure Bay’s human resources department to find out what he should do.
Employees at other Coast casinos took to private groups on social media to express their frustrations.
Smith said he isn’t so much upset that he has to replay, but he objects to Mississippi Department of Employment Security claiming fraud in the filing of his claim.
“If I owe you the money, fine. Don’t put me in as fraudulent,” he said.
What the letter says
The letter from Mississippi Department of Employment Security said the agency determined he violated state law by failing to properly report his gross earnings with Treasure Bay Casino Biloxi.
The agency said an investigation showed Smith was overpaid just over $1,000 when a penalty was added to the total.
“If any week of the overpayment is determined to be fraudulent, a 20% penalty will be applied,” the letter said. The penalty added to Smith’s total was $167.
Smith also is not allowed claim any benefits for six weeks starting Dec. 26, 2021, the letter said, “as you failed to properly report your earnings.”
Smith said the unemployment office basically is saying to the casino employees “you lied to us,” when that isn’t what happened.
He and other employees filed their claim with the amount of their base pay and before they got the pay stub for their tips, he said.
“Nobody lied. We just used the information we had available,” he said.
Casino-wide issue
Susan Varnes, general manager at Treasure Bay, said the unemployment issue isn’t just happening at her casino.
“This is a very complicated situation that affects tipped employees industry-wide,” she told the Sun Herald.
“What first needs to be understood is that the majority of individuals on our team who filed for unemployment had never filed for unemployment benefits in the past, and the process was very confusing for them,” she said.
Varnes said the issue stems from the timing of reported base wages and tip outs.
“For instance, individuals were required to report earnings on Sunday nights to MDES and may have reported their base wages only because they did not know until the following week what their tip wages were,” she said. “If a tipped individual is audited week to week, the amounts will most certainly not align.”
Varnes offered to work with MDES to clear the claims.
“I hope MDES will be understanding of these situations and, if errors were made, allow the individuals to pay the difference with no penalties,” she said. “We would be happy to assist MDES and our crew try to better understand the matter in an effort to eliminate penalties or anyone being accused of fraud.”
More than 45,000 workers in Mississippi filed for unemployment in the first two months of the pandemic and the staff and phone system at MDES couldn’t keep up with all the claims.
Before the pandemic began in March 2020, about 1,000 people filed first-time claims each week in the entire state.
Employees at Scarlet Pearl Casino in D’Iberville answered phones from 7 a.m. to midnight and helped people file claims for weeks to help MDES through the crisis. Scarlet Pearl management volunteered its staff members, who already had background checks and a compatible phone system.
Unemployment office responds
The unemployment office told the Sun Herald they are complying with state law in demanding repayment.
“Under current Mississippi law, when a person receives unemployment insurance benefits, and they are later found to be ineligible or disqualified for any reason, they are required to repay the State of Mississippi the full amount of UI benefits they received,” MDES said.
MDES said to those who are found to have an overpayment “must repay all benefits that are overpaid even if you were paid in error.”
They should pay the full amount within 60 days, the agency says, or arrange to pay a minimum of $150 every month until the the debt is satisfied, with 1% interest charged per month on the unpaid amount.
Those who want to contact MDES about the letters they received can call the office from 8 a.m. to 5 p.m., Monday through Friday.
Auditor charges
The review of the unemployment claims made during the early days of the pandemic comes after a July 2020 report that says MDES incorrectly paid $118 million in unemployment benefits in 2020, the first year of the pandemic.
The independent audit report by State Auditor Shad White’s office said overpayments weren’t discovered because MDES staff was overwhelmed by the high number of unemployment claims filed at the beginning of the pandemic.
During the early days of the virus, the agency waived many of the usual provisions such as the one week waiting period and the requirement that people actively seek work. Claims were approved without social security number verification from March to May 20, the audit says.
With these controls not in place, the report says, “MDES was unable to properly monitor the immense influx of claims and to properly vet those claims for fraud.”
The audit recommends these controls never be relaxed again.
“Additionally, we recommend further analysis of the overpayments of unemployment claims be performed in order to maximize the potential for recovery of fraudulent payments,” the report says.
This story was originally published January 14, 2022 at 12:09 PM.
